Attached files

file filename
8-K/A - AMENDMENT TO FORM 8-K - NGL Energy Partners LPa13-21742_28ka.htm
EX-23.1 - EX-23.1 - NGL Energy Partners LPa13-21742_2ex23d1.htm
EX-99.1 - EX-99.1 - NGL Energy Partners LPa13-21742_2ex99d1.htm
EX-99.7 - EX-99.7 - NGL Energy Partners LPa13-21742_2ex99d7.htm
EX-99.2 - EX-99.2 - NGL Energy Partners LPa13-21742_2ex99d2.htm
EX-99.5 - EX-99.5 - NGL Energy Partners LPa13-21742_2ex99d5.htm
EX-99.6 - EX-99.6 - NGL Energy Partners LPa13-21742_2ex99d6.htm
EX-99.3 - EX-99.3 - NGL Energy Partners LPa13-21742_2ex99d3.htm
EX-99.4 - EX-99.4 - NGL Energy Partners LPa13-21742_2ex99d4.htm
EX-99.8 - EX-99.8 - NGL Energy Partners LPa13-21742_2ex99d8.htm

Exhibit 99.9

 

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

 

Introduction

 

The following represents the unaudited pro forma condensed consolidated balance sheet of NGL Energy Partners LP (“we”, “us”, “our”, “NGL” or “the Partnership”) as of June 30, 2013 and the unaudited pro forma condensed consolidated statements of operations for the year ended March 31, 2013 and the three months ended June 30, 2013. The accompanying unaudited condensed consolidated financial statements give pro forma effect to a number of transactions, which are summarized below:

 

·                  On August 1, 2013, we acquired all of the membership interests in seven entities (collectively, the “OWL Entities”) affiliated with Oilfield Water Lines, LP, whereby we acquired water disposal and transportation assets in Texas. We issued 2,463,287 common units, valued at $68.6 million, and paid $167.7 million of cash, net of cash acquired, in exchange for the assets and operations of the OWL Entities. The agreement also contemplates a post-closing payment for certain working capital items. The agreements with the former owners of the OWL Entities include a provision whereby the purchase price may be increased if certain performance targets are achieved. If the acquired assets generate Adjusted EBITDA, as defined in the agreements, in excess of $3.3 million during any one of the six months following the acquisition, the purchase price will be increased by seventy-two times the amount by which this target is exceeded. The maximum potential increase to the purchase price under this provision is $60 million. The acquired entities included the following entities that were formed during 2012 by Oilfield Water Lines, LP: OWL Cotulla SWD, LLC; OWL Nixon SWD, LLC; OWL Operating, LLC; and HR OWL, LLC. The acquired entities also include the following entities that were acquired during 2012 by Oilfield Water Lines, LP: High Roller Wells Pearsall SWD No. 1, Ltd., which was acquired on August 28, 2012 and renamed OWL Pearsall SWD, LLC; High Roller Wells Karnes SWD No. 1, Ltd., which was acquired on December 4, 2012 and renamed OWL Karnes SWD, LLC; and Lotus Oilfield Services, LLC, which was acquired on December 27, 2012.

 

·                  On July 5, 2013, we completed a public offering of 10,350,000 common units. We received net proceeds of approximately $287.5 million, after underwriting discounts and commissions of $12.0 million and estimated offering costs of $0.7 million. We used the majority of the net proceeds from the offering to reduce the balance on our Revolving Credit Facility.

 

·                  On December 31, 2012, we entered into a Sale Agreement (the “Sale Agreement”) with Third Coast Towing, LLC (“Third Coast”) and the former owners of Third Coast (the “Selling Members”) pursuant to which we acquired all of the limited liability company membership interests of Third Coast in exchange for $43.0 million in cash. The purchase price may be subject to further adjustment under the terms of the Sale Agreement, including with respect to refinements to the estimated value of the acquired working capital.

 

·                  On December 31, 2012, we entered into a Call Agreement (the “Third Coast Call Agreement”) with the Selling Members pursuant to which the Selling Members agreed to purchase at least $8.0 million (or at their option, up to $10.0 million) of common units of the Partnership at an agreed value of $23.21 per unit in a private placement. On January 11, 2013, the Selling Members purchased 344,680 common units pursuant to the Third Coast Call Agreement.

 

·                  On November 2, 2012, we completed an acquisition of Pecos Gathering & Marketing, L.L.C. and its affiliated companies Transwest Leasing, LLC, Blackhawk Gathering, LLC, Midstream Operations, LLC, and Striker Oilfield Services, LLC (collectively, “Pecos”) pursuant to an Equity Purchase Agreement (the “Equity Purchase Agreement”) with Pecos and the owners of Pecos. We acquired all of the limited liability company membership interests of Pecos in exchange for approximately $134.6 million of cash, which included payments made to the selling owners and payments made to retire certain liabilities of Pecos. The purchase price may be subject to further adjustment under the terms of the Equity Purchase Agreement, including with respect to refinements to the estimated value of the acquired working capital.

 

·                  In connection with the closing of the acquisition of Pecos, we entered into a Call Agreement (the “Pecos Call Agreement”) with the former owners of Pecos (the “Call Parties”) pursuant to which the Call Parties agreed to purchase at least $45.0 million (or at their option, up to $60.0 million) of common units of the Partnership in a private placement following the consummation of the Pecos acquisition. On November 12, 2012, the Call Parties purchased 1,834,414 common units for an aggregate call price of $45.0 million pursuant to the Pecos Call Agreement.

 

1



 

·                  On January 15, 2013, we entered into an amendment to our Credit Agreement to increase the capacity under our revolving credit facility.

 

·                  On June 19, 2012, we completed a business combination with High Sierra Energy, LP and High Sierra Energy GP, LLC (collectively, “High Sierra”). High Sierra’s businesses include crude oil gathering, transportation and marketing; water treatment, disposal, and transportation; and natural gas liquids transportation and marketing. We paid $91.8 million of cash (net of $5.0 million of cash acquired) and issued 18,018,468 common units to acquire High Sierra Energy, LP. We also paid $97.4 million of cash to retire long-term debt of High Sierra Energy, LP and to settle certain other of High Sierra Energy, LP’s obligations. Our general partner acquired High Sierra Energy GP, LLC by paying $50.0 million of cash and issuing equity. Our general partner then contributed its ownership interests in High Sierra Energy GP, LLC to us, in return for which we paid our general partner $50.0 million of cash and issued 2,685,042 common units to our general partner.

 

·                  On June 19, 2012, we entered into a new revolving credit agreement (the “Credit Agreement”) with a syndicate of banks. Also on June 19, 2012, we entered into a Note Purchase Agreement whereby we issued $250 million of notes payable in a private placement (the “Senior Notes”). We used the proceeds from the issuance of the Senior Notes and borrowings under the Credit Agreement to repay existing debt and to fund the acquisition of High Sierra.

 

The accompanying unaudited pro forma condensed consolidated balance sheet as of June 30, 2013 gives pro forma effect to the following, as if such transactions (in each case, as described in more detail above) had occurred on June 30, 2013:

 

·                  Our business combination with the OWL Entities; and

 

·                  The sale of common units in a public offering in July 2013.

 

The accompanying unaudited pro forma condensed consolidated statement of operations for the year ended March 31, 2013 gives pro forma effect to the following, as if such transactions had occurred on April 1, 2012:

 

·                  Our business combination with the OWL Entities;

 

·                  The sale of common units in a public offering in July 2013;

 

·                  Our business combination with Third Coast;

 

·                  The sale of common units pursuant to the Third Coast Call Agreement;

 

·                  Our business combination with Pecos;

 

·                  The sale of common units pursuant to the Pecos Call Agreement;

 

·                  Our entry into an amendment to our Credit Agreement in January 2013;

 

·                  Our business combination with High Sierra;

 

·                  Our entry into the Credit Agreement in June 2012; and

 

·                  Our issuance of Senior Notes in June 2012.

 

The accompanying unaudited pro forma condensed consolidated statement of operations for the three months ended June 30, 2013 gives pro forma effect to the following, as if such transactions (in each case, as described in more detail above) had occurred on April 1, 2012:

 

·                  Our business combination with the OWL Entities; and

 

·                  The sale of common units in a public offering in July 2013.

 

The unaudited pro forma condensed consolidated financial statements are provided for informational purposes only and should be read in conjunction with the following:

 

·                  The audited historical financial statements of NGL Energy Partners LP included in our Annual Report on Form 10-K for the year ended March 31, 2013;

 

·                  The unaudited historical financial statements of NGL Energy Partners LP included in our Quarterly Report on Form 10-Q for the three months ended June 30, 2013;

 

2



 

·                  The audited and unaudited consolidated financial statements of Oilfield Water Lines, LP (“OWL LP”) included in this Current Report on Form 8-K/A;

 

·                  The audited and unaudited financial statements of High Roller Wells Pearsall SWD No. 1, Ltd. (“Pearsall”) included in this Current Report on Form 8-K/A;

 

·                  The audited and unaudited financial statements of High Roller Wells Karnes SWD No. 1, Ltd. (“Karnes”) included in this Current Report on Form 8-K/A;

 

·                  The audited and unaudited financial statements of Lotus Oilfield Services, LLC (“Lotus”) included in this Current Report on Form 8-K/A;

 

·                  The audited and unaudited historical financial statements of Third Coast Towing, LLC included in our Current Report on Form 8-K/A filed on March 13, 2013;

 

·                  The audited and unaudited historical financial statements of Pecos Gathering and Marketing, LLC, Transwest Leasing, LLC, Blackhawk Gathering, LLC, Midstream Operations, LLC, Toro Operating Company, Inc., and Striker Oilfield Services, LLC included in our current report on Form 8-K/A filed on January 18, 2013; and

 

·                  The audited and unaudited historical financial statements of High Sierra Energy GP, LLC included in our Current Report on Form 8-K/A filed on September 4, 2012.

 

The following unaudited pro forma condensed consolidated financial statements are based on certain assumptions and do not purport to be indicative of the results that actually would have been achieved if the events described above had occurred on the dates indicated. Moreover, they do not project NGL’s results of operations for any future date or period.

 

The accompanying unaudited pro forma condensed consolidated statements of operations reflect depreciation and amortization estimates which are preliminary, as our identification of the assets and liabilities acquired, and the fair value determinations thereof, for the business combinations with the OWL Entities, Pecos, and Third Coast have not been completed. The fair value estimates reflected in the accompanying unaudited pro forma condensed consolidated statements of operations are based on the best estimates available at this time. There is no guarantee that the preliminary fair value estimates, and consequently the unaudited pro forma condensed consolidated statements of operations, will not change. To the extent that the final acquisition accounting results in an increased allocation of goodwill recorded, this amount would not be subject to amortization, but would be subject to annual impairment testing. To the extent the final acquisition accounting results in an increase to the preliminary computation of depreciable property, plant and equipment or amortizable intangible assets done for the purpose of preparing these unaudited pro forma statements of operations, the amount would be subject to depreciation or amortization, which would result in a decrease to the estimated pro forma income reflected in the accompanying unaudited pro forma condensed consolidated statements of operations. We expect to complete the final acquisition accounting for the Pecos combination prior to filing our Form 10-Q for the quarter ended September 30, 2013. We expect to complete the final acquisition accounting for the Third Coast combination prior to filing our Form 10-Q for the quarter ended December 31, 2013. We expect to complete the final acquisition accounting for the combination with the OWL Entities prior to filing our Form 10-Q for the quarter ended June 30, 2014.

 

3



 

NGL ENERGY PARTNERS LP

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of June 30, 2013

(U.S. Dollars in Thousands)

 

 

 

Historical

 

 

 

 

 

 

 

 

 

 

 

 

 

NGL

 

OWL

 

 

 

 

 

 

 

 

 

NGL Pro Forma

 

 

 

As Of

 

As Of

 

Pro Forma Adjustments

 

As Of

 

 

 

June 30,

 

June 30,

 

OWL

 

Note

 

Equity

 

Note

 

June 30,

 

 

 

2013

 

2013

 

Entities

 

2

 

Offering

 

2

 

2013

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,603

 

$

1,144

 

$

(1,072

)

(a)

 

$

 

 

 

$

4,675

 

Accounts receivable

 

545,317

 

7,144

 

1,406

 

(a)

 

 

 

 

553,867

 

Accounts receivable - affiliates

 

14,479

 

 

 

 

 

 

 

 

14,479

 

Inventories

 

208,329

 

 

154

 

(a)

 

 

 

 

208,483

 

Prepaid expenses and other current assets

 

39,805

 

1,293

 

(1,257

)

(a)

 

 

 

 

39,841

 

Total current assets

 

812,533

 

9,581

 

(769

)

 

 

 

 

 

821,345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT, net

 

536,451

 

32,816

 

2,184

 

(a)

 

 

 

 

571,451

 

GOODWILL

 

563,186

 

18,681

 

120,548

 

(a)

 

 

 

 

702,415

 

INTANGIBLE ASSETS, net

 

434,861

 

 

62,000

 

(a)

 

 

 

 

496,861

 

OTHER NONCURRENT ASSETS

 

6,270

 

665

 

(319

)

(a)

 

 

 

 

6,616

 

Total assets

 

$

2,353,301

 

$

61,743

 

$

183,644

 

 

 

$

 

 

 

$

2,598,688

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts payable

 

$

571,286

 

$

4,286

 

$

1,764

 

(a)

 

$

 

 

 

$

577,336

 

Accrued expenses and other payables

 

96,458

 

2,190

 

846

 

(a)

 

 

 

 

99,494

 

Advance payments received from customers

 

35,252

 

 

 

 

 

 

 

 

35,252

 

Accounts payable - affiliates

 

10,504

 

 

 

 

 

 

 

 

10,504

 

Current maturities of long-term debt

 

8,720

 

2,927

 

(2,927

)

(a)

 

 

 

 

8,720

 

Total current liabilities

 

722,220

 

9,403

 

(317

)

 

 

 

 

 

731,306

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LONG-TERM DEBT, net of current maturities

 

781,816

 

1,903

 

165,748

 

(a)

 

(287,794

)

(c)

 

661,673

 

OTHER NONCURRENT LIABILITIES

 

3,539

 

 

 

 

 

 

 

 

3,539

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PARTNERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General Partner

 

(49,999

)

 

72

 

(a)

 

300

 

(c)

 

(49,627

)

Limited Partners

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common units

 

881,611

 

 

68,578

 

(a)

 

287,494

 

(c)

 

1,237,683

 

Subordinated units

 

7,615

 

 

 

 

 

 

 

 

7,615

 

Accumulated other comprehensive income

 

(1

)

 

 

 

 

 

 

 

(1

)

Noncontrolling interests

 

6,500

 

 

 

 

 

 

 

 

6,500

 

Total partners’ equity

 

845,726

 

 

68,650

 

 

 

287,794

 

 

 

1,202,170

 

Equity of combined businesses

 

 

50,437

 

(50,437

)

(b)

 

 

 

 

 

Total liabilities and partners’ equity

 

$

2,353,301

 

$

61,743

 

$

183,644

 

 

 

$

 

 

 

$

2,598,688

 

 

See accompanying notes.

 

4



 

NGL ENERGY PARTNERS LP

Unaudited Pro Forma Condensed Consolidated

Statement of Operations

For the Year Ended March 31, 2013

(U.S. Dollars in Thousands, Except Unit and Per Unit Amounts)

(Page 1 of 3)

 

 

 

 

 

High

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical

 

Sierra

 

Pecos

 

 

 

 

 

 

 

 

 

 

 

 

 

NGL

 

Two Months

 

Six Months

 

Pro Forma Adjustments

 

 

 

 

 

Year ended

 

Ended

 

Ended

 

High

 

Note

 

 

 

Note

 

 

 

 

 

March 31, 2013

 

May 31, 2012

 

Sept. 30, 2012

 

Sierra

 

2

 

Pecos

 

2

 

To Page 2

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil logistics

 

$

2,316,288

 

$

419,703

 

$

455,485

 

$

(7,934

)

(d)

 

$

(284

)

(i)

 

$

3,183,258

 

Water services

 

62,227

 

15,038

 

 

(3,849

)

(d)

 

 

 

 

73,416

 

Natural gas liquids logistics

 

1,604,746

 

114,837

 

 

9,600

 

(d)

 

 

 

 

1,729,183

 

Retail propane

 

430,273

 

 

 

 

 

 

 

 

 

430,273

 

Other

 

4,233

 

805

 

 

 

 

 

 

 

 

5,038

 

 

 

4,417,767

 

550,383

 

455,485

 

(2,183

)

 

 

(284

)

 

 

5,421,168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF SALES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil logistics

 

2,244,647

 

403,755

 

421,930

 

(7,934

)

(d)

 

(284

)

(i)

 

3,062,114

 

Water services

 

5,611

 

1,149

 

 

(3,849

)

(d)

 

 

 

 

2,911

 

Natural gas liquids logistics

 

1,530,459

 

123,712

 

 

9,600

 

(d)

 

 

 

 

1,663,771

 

Retail propane

 

258,393

 

 

 

 

 

 

 

 

 

258,393

 

 

 

4,039,110

 

528,616

 

421,930

 

(2,183

)

 

 

(284

)

 

 

4,987,189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating and general and administrative

 

222,497

 

16,913

 

16,497

 

(4,738

)

(e)

 

(576

)

(j)

 

250,593

 

Depreciation and amortization

 

68,853

 

3,835

 

2,345

 

5,506

 

(f)

 

1,468

 

(k)

 

82,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

87,307

 

1,019

 

14,713

 

(768

)

 

 

(892

)

 

 

101,379

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(32,994

)

(2,178

)

(615

)

(712

)

(g)

 

(1,204

)

(l)

 

(37,703

)

Loss on early extinguishment of debt

 

(5,769

)

 

 

 

 

 

 

 

 

(5,769

)

Other, net

 

1,521

 

150

 

9

 

 

 

 

 

 

 

1,680

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) Before Income Taxes

 

50,065

 

(1,009

)

14,107

 

(1,480

)

 

 

(2,096

)

 

 

59,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX (PROVISION) BENEFIT

 

(1,875

)

(829

)

 

 

 

 

 

 

 

(2,704

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

48,190

 

(1,838

)

14,107

 

(1,480

)

 

 

(2,096

)

 

 

56,883

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS (INCOME) FROM CONTINUING OPERATIONS ALLOCATED TO GENERAL PARTNER

 

(2,917

)

 

 

 

 

3

 

(h)

 

(12

)

(m)

 

(2,926

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS (INCOME) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

(250

)

(34

)

 

 

 

 

 

 

 

(284

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO PARENT EQUITY ALLOCATED TO LIMITED PARTNERS

 

$

45,023

 

$

(1,872

)

$

14,107

 

$

(1,477

)

 

 

$

(2,108

)

 

 

$

53,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per unit from continuing operations (Note 3) -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

 

$

0.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subordinated

 

$

0.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average units outstanding -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

 

41,353,574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subordinated

 

5,919,346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes and continuation on Page 2 of 3.

 

5



 

NGL ENERGY PARTNERS LP

Unaudited Pro Forma Condensed Consolidated

Statement of Operations

For the Year Ended March 31, 2013

(U.S. Dollars in Thousands, Except Unit and Per Unit Amounts)

(Page 2 of 3)

 

 

 

 

 

Third

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months

 

Pro Forma Adjustments

 

 

 

 

 

 

 

Ended

 

Third

 

Note

 

Equity

 

Note

 

 

 

 

 

From Page 1

 

Dec. 31, 2012

 

Coast

 

2

 

Offering

 

2

 

To Page 3

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil logistics

 

$

3,183,258

 

$

9,281

 

$

 

 

 

$

 

 

 

$

3,192,539

 

Water services

 

73,416

 

 

 

 

 

 

 

 

73,416

 

Natural gas liquids logistics

 

1,729,183

 

 

 

 

 

 

 

 

1,729,183

 

Retail propane

 

430,273

 

 

 

 

 

 

 

 

430,273

 

Other

 

5,038

 

 

 

 

 

 

 

 

5,038

 

 

 

5,421,168

 

9,281

 

 

 

 

 

 

5,430,449

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF SALES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil logistics

 

3,062,114

 

 

 

 

 

 

 

 

3,062,114

 

Water services

 

2,911

 

 

 

 

 

 

 

 

2,911

 

Natural gas liquids logistics

 

1,663,771

 

 

 

 

 

 

 

 

1,663,771

 

Retail propane

 

258,393

 

 

 

 

 

 

 

 

258,393

 

 

 

4,987,189

 

 

 

 

 

 

 

4,987,189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating and general and administrative

 

250,593

 

7,940

 

(257

)

(n)

 

 

 

 

258,276

 

Depreciation and amortization

 

82,007

 

731

 

568

 

(o)

 

 

 

 

83,306

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

101,379

 

610

 

(311

)

 

 

 

 

 

101,678

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(37,703

)

(115

)

(417

)

(p)

 

9,036

 

(q)

 

(29,199

)

Loss on early extinguishment of debt

 

(5,769

)

 

 

 

 

 

 

 

(5,769

)

Other, net

 

1,680

 

 

 

 

 

 

 

 

1,680

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) Before Income Taxes

 

59,587

 

495

 

(728

)

 

 

9,036

 

 

 

68,390

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX (PROVISION) BENEFIT

 

(2,704

)

 

 

 

 

 

 

 

(2,704

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

56,883

 

495

 

(728

)

 

 

9,036

 

 

 

65,686

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS (INCOME) FROM CONTINUING OPERATIONS ALLOCATED TO GENERAL PARTNER

 

(2,926

)

 

 

 

 

 

 

(10

)

(r)

 

(2,936

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS (INCOME) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

(284

)

 

 

 

 

 

 

 

(284

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO PARENT EQUITY ALLOCATED TO LIMITED PARTNERS

 

$

53,673

 

$

495

 

$

(728

)

 

 

$

9,026

 

 

 

$

62,466

 

 

See accompanying notes and continuation on Page 3 of 3.

 

6



 

NGL ENERGY PARTNERS LP

Unaudited Pro Forma Condensed Consolidated

Statement of Operations

For the Year Ended March 31, 2013

(U.S. Dollars in Thousands, Except Unit and Per Unit Amounts)

(Page 3 of 3)

 

 

 

 

 

Historical for the Year Ended December 31, 2012

 

Pro Forma Adjustments

 

 

 

 

 

 

 

 

 

OWL

 

Note

 

NGL

 

 

 

From Page 2

 

OWL LP

 

Pearsall

 

Karnes

 

Lotus

 

Entities

 

2

 

Pro Forma

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil logistics

 

$

3,192,539

 

$

 

$

 

$

 

$

 

 

 

 

$

3,192,539

 

Water services

 

73,416

 

5,677

 

9,001

 

4,659

 

8,402

 

 

 

 

101,155

 

Natural gas liquids logistics

 

1,729,183

 

 

 

 

 

 

 

 

1,729,183

 

Retail propane

 

430,273

 

 

 

 

 

 

 

 

430,273

 

Other

 

5,038

 

 

 

 

 

 

 

 

5,038

 

 

 

5,430,449

 

5,677

 

9,001

 

4,659

 

8,402

 

 

 

 

5,458,188

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF SALES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil logistics

 

3,062,114

 

 

 

 

 

 

 

 

3,062,114

 

Water services

 

2,911

 

 

 

 

 

 

 

 

2,911

 

Natural gas liquids logistics

 

1,663,771

 

 

 

 

 

 

 

 

1,663,771

 

Retail propane

 

258,393

 

 

 

 

 

 

 

 

258,393

 

 

 

4,987,189

 

 

 

 

 

 

 

 

4,987,189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating and general and administrative

 

258,276

 

2,374

 

4,137

 

2,545

 

7,168

 

 

 

 

274,500

 

Depreciation and amortization

 

83,306

 

269

 

243

 

301

 

409

 

8,345

 

(s)

 

92,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

101,678

 

3,034

 

4,621

 

1,813

 

825

 

(8,345

)

 

 

103,626

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(29,199

)

(4,926

)

(12

)

(18

)

(132

)

(5,027

)

(t)

 

(39,314

)

Loss on early extinguishment of debt

 

(5,769

)

 

 

 

 

 

 

 

(5,769

)

Other, net

 

1,680

 

 

 

 

14

 

 

 

 

1,694

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) Before Income Taxes

 

68,390

 

(1,892

)

4,609

 

1,795

 

707

 

(13,372

)

 

 

60,237

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX (PROVISION) BENEFIT

 

(2,704

)

(35

)

(68

)

(27

)

(36

)

 

 

 

(2,870

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

65,686

 

(1,927

)

4,541

 

1,768

 

671

 

(13,372

)

 

 

57,367

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS (INCOME) FROM CONTINUING OPERATIONS ALLOCATED TO GENERAL PARTNER

 

(2,936

)

 

 

 

 

 

 

 

 

11

 

(u)

 

(2,925

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS (INCOME) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

(284

)

(936

)

 

 

 

936

 

 

 

(284

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO PARENT EQUITY ALLOCATED TO LIMITED PARTNERS

 

$

62,466

 

$

(2,863

)

$

4,541

 

$

1,768

 

$

671

 

$

(12,425

)

 

 

$

54,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma basic and diluted earnings per unit from continuing operations (Note 3) -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.81

 

Subordinated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average units outstanding -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60,974,503

 

Subordinated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,919,346

 

 

7



 

NGL ENERGY PARTNERS LP

Unaudited Pro Forma Condensed Consolidated

Statement of Operations

For the Three Months Ended June 30, 2013

(U.S. Dollars in Thousands, Except Unit and Per Unit Amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NGL

 

 

 

NGL

 

OWL LP

 

 

 

 

 

 

 

 

 

Pro Forma

 

 

 

Three Months

 

Three Months

 

Pro Forma Adjustments

 

Three Months

 

 

 

Ended

 

Ended

 

Equity

 

Note

 

 

 

Note

 

Ended

 

 

 

June 30, 2013

 

June 30, 2013

 

Offering

 

2

 

OWL LP

 

2

 

June 30, 2013

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil logistics

 

$

930,794

 

$

 

$

 

 

 

$

 

 

 

$

930,794

 

Water services

 

20,513

 

12,042

 

 

 

 

 

 

 

32,555

 

Natural gas liquids logistics

 

360,959

 

 

 

 

 

 

 

 

360,959

 

Retail propane

 

72,217

 

 

 

 

 

 

 

 

72,217

 

Other

 

1,474

 

 

 

 

 

 

 

 

1,474

 

 

 

1,385,957

 

12,042

 

 

 

 

 

 

 

1,397,999

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF SALES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil logistics

 

909,219

 

 

 

 

 

 

 

 

909,219

 

Water services

 

583

 

 

 

 

 

 

 

 

583

 

Natural gas liquids logistics

 

350,251

 

 

 

 

 

 

 

 

350,251

 

Retail propane

 

43,023

 

 

 

 

 

 

 

 

43,023

 

 

 

1,303,076

 

 

 

 

 

 

 

 

1,303,076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating and general and administrative

 

67,499

 

8,082

 

 

 

 

 

 

 

75,581

 

Depreciation and amortization

 

22,724

 

696

 

 

 

 

1,696

 

(y)

 

25,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

(7,342

)

3,264

 

 

 

 

(1,696

)

 

 

(5,774

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(10,622

)

(62

)

2,302

 

(w)

 

(1,279

)

(z)

 

(9,661

)

Other, net

 

50

 

 

 

 

 

 

 

 

50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) Before Income Taxes

 

(17,914

)

3,202

 

2,302

 

 

 

(2,975

)

 

 

(15,385

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX (PROVISION) BENEFIT

 

406

 

(74

)

 

 

 

 

 

 

332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

(17,508

)

3,128

 

2,302

 

 

 

(2,975

)

 

 

(15,053

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS (INCOME) FROM CONTINUING OPERATIONS ALLOCATED TO GENERAL PARTNER

 

(1,688

)

 

 

(2

)

(x)

 

 

 

 

(1,690

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS (INCOME) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

(125

)

(1,033

)

 

 

 

1,033

 

(A)

 

(125

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO PARENT EQUITY ALLOCATED TO LIMITED PARTNERS

 

$

(19,321

)

$

2,095

 

$

2,300

 

 

 

$

(1,942

)

 

 

$

(16,868

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per unit from continuing operations (Note 3) -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

 

$

(0.35

)

 

 

 

 

 

 

 

 

 

 

$

(0.25

)

Subordinated

 

$

(0.46

)

 

 

 

 

 

 

 

 

 

 

$

(0.25

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average units outstanding -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

 

47,703,313

 

 

 

 

 

 

 

 

 

 

 

60,974,503

 

Subordinated

 

5,919,346

 

 

 

 

 

 

 

 

 

 

 

5,919,346

 

 

See accompanying notes.

 

8



 

NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

Note 1 — Basis of Presentation

 

See — Introduction for more information regarding the basis of presentation for our unaudited pro forma condensed consolidated financial statements.

 

The results of operations of OWL LP for the three months ended June 30, 2013 were compiled by reducing the results for the six months ended June 30, 2013 by the results for the three months ended March 31, 2013. The results of operations for the three months ended March 31, 2013 are not separately included herein.

 

Note 2 — Pro Forma Adjustments

 

Our unaudited pro forma condensed consolidated financial statements reflect the impact of the following pro forma adjustments:

 

Balance Sheet as of June 30, 2013

 

The historical condensed consolidated balance sheet of NGL as of June 30, 2013 includes the consolidation of High Sierra, Pecos, and Third Coast and reflects the impact of the June 2012 credit facility refinancing and the June 2012 issuance of Senior Notes.

 

OWL Combination Transaction Adjustments

 

(a)                                 Represents the consideration paid in the combination and the resulting net adjustment to the historical net assets at June 30, 2013 to reflect the preliminary acquisition accounting based on the following estimate of the fair values of the assets acquired and liabilities assumed at August 1, 2013 (in thousands):

 

Accounts receivable

 

$

8,550

 

Inventory

 

154

 

Other current assets

 

36

 

Property, plant and equipment:

 

 

 

Water treatment facilities (30 years)

 

23,000

 

Vehicles (5 years)

 

9,000

 

Land

 

1,000

 

Other (10 years)

 

2,000

 

Amortizable intangible assets:

 

 

 

Customer relationships (10 years)

 

60,000

 

Noncompete agreements (2.5 years)

 

2,000

 

Goodwill

 

139,229

 

Other noncurrent assets

 

346

 

Accounts payable

 

(6,050

)

Accrued expenses

 

(3,036

)

Total consideration paid

 

$

236,229

 

 

 

 

 

The consideration paid consists of the following (in thousands):

 

 

 

 

 

 

 

Cash paid, net of cash acquired

 

$

167,651

 

Value of common units issued

 

68,578

 

Total consideration paid

 

$

236,229

 

 

The pro forma adjustment includes the issuance of common units pursuant to the LLC Interest Transfer Agreements and also includes borrowings of $167.7 million on our credit facility to fund the acquisition. The pro forma adjustment includes a contribution of $72,000 from our general partner to maintain its 0.1% interest in the Partnership.

 

The LLC Transfer Agreements contain an “earn-out” provision, whereby the sellers of the OWL Entities are entitled to additional consideration if the financial performance of the businesses exceeds a target that is

 

9



 

NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements - Continued

 

specified in the LLC Transfer Agreements during any one of the six months following the date of acquisition.

 

(b)                                 Reflects the elimination of the historical net equity of OWL LP as of June 30, 2013.

 

Equity Offering Transaction Adjustments

 

(c)                                  Reflects the receipt of proceeds in July 2013 from an underwritten offering of 10,350,000 common units and the use of the proceeds from the offering to repay long-term debt.

 

Statement of Operations for the Year Ended March 31, 2013

 

High Sierra Combination Transaction Adjustments

 

(d)                                 Reflects a reclassification of gains/losses on commodity derivatives recorded by High Sierra from revenues to cost of sales, to be consistent with NGL’s classification of these gains/losses.

 

(e)                                  Reflects the elimination of expenses incurred directly by us and by High Sierra in connection with our merger with High Sierra.

 

(f)                                   Reflects an increase in historical depreciation and amortization expense of the High Sierra long-lived assets based on the fair value of the assets acquired in the business combination.

 

(g)                                  Reflects the addition of pro forma interest expense on Senior Notes issued to finance the $244.2 million of merger consideration that was paid in cash (exclusive of cash acquired), at a rate of 6.65%, net of the elimination of the historical interest expense of High Sierra (exclusive of letter of credit fees). A change in the interest rate of 0.125% would result in a change of approximately $305,000 in pro forma interest expense.

 

(h)                                 Represents the general partner’s 0.1% share of the High Sierra loss after the effect of the pro forma adjustments.

 

Pecos Combination Transaction Adjustments

 

(i)                                     Reflects a reclassification of losses on commodity derivatives recorded by Pecos from revenues to cost of sales, to be consistent with NGL’s classification of derivative gains/losses.

 

(j)                                    Reflects the elimination of expenses incurred by us in connection with our acquisition of Pecos.

 

(k)                                 Reflects the increase in depreciation and amortization expense of the Pecos long-lived assets based on the estimated fair value of the assets acquired in the business combination. The pro forma average annual depreciation and amortization rate based on the estimated fair value and useful lives if the depreciable and amortizable long-lived assets is 26%. An increase in the current estimated fair value of the depreciable and amortizable long-lived assets of $1 million would result in an increase of approximately $256,000 to pro forma depreciation and amortization expense for the year ended March 31, 2013. The estimated fair value of depreciable property, plant and equipment and amortizable intangible assets acquired in the transaction is summarized below (in thousands):

 

10



 

NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements - Continued

 

Property, plant and equipment:

 

 

 

Vehicles and related equipment (5-10 years)

 

$

19,193

 

Other

 

2,562

 

 

 

 

 

Amortizable intangible assets:

 

 

 

Customer relationships (5 years)

 

8,000

 

 

(l)                                     Represents the additional interest expense resulting from the advances of $89.6 million from our acquisition facility to finance the Pecos combination at the interest rate in effect on LIBOR option borrowings at September 30, 2012 of 3.22%. A change in the interest rate of 0.125% would result in a change of approximately $112,000 in pro forma interest expense for the year ended March 31, 2013.

 

(m)                             Represents the general partner’s 0.1% share of the income of Pecos after the effect of the pro forma adjustments.

 

Third Coast Combination Transaction Adjustments

 

(n)                                 Reflects the elimination of expenses incurred by us in connection with our acquisition of Third Coast.

 

(o)                                 Reflects an increase in historical depreciation and amortization expense of the Third Coast long-lived assets based on the estimated fair value of the assets acquired in the business combination. The pro forma average annual depreciation and amortization rate based on the estimated fair value and useful lives of the depreciable and amortizable long-lived assets is 10%. An increase in the current estimated fair value of the depreciable and amortizable long-lived assets of $1 million would result in an increase of approximately $102,000 to pro forma depreciation and amortization expense for the year ended March 31, 2013. The estimated fair value of depreciable property, plant and equipment and amortizable intangible assets acquired in the transaction is summarized below (in thousands):

 

Property, plant and equipment:

 

 

 

Barges and tow boats (20 years)

 

$

12,883

 

Other (3-5 years)

 

30

 

Amortizable intangible assets:

 

 

 

Customer relationships (5 years)

 

4,000

 

 

(p)                                 Represents the additional interest expense resulting from advances of $35.0 million from our acquisition facility to finance the Third Coast combination at the interest rate in effect on LIBOR option borrowings at September 30, 2012 of 3.22%. A change in the interest rate of 0.125% would result in a change of approximately $44,000 in pro forma interest expense for the year ended March 31, 2013.

 

Equity Offering Transaction Adjustments

 

(q)                                 Represents a pro forma reduction to interest expense related to the repayment of debt upon completion of the July 2013 equity offering at the interest rate in effect on LIBOR rate borrowings at June 30, 2013 of 3.2%. A change in the interest rate of 0.125% would result in a change of approximately $353,000 to pro forma interest expense.

 

(r)                                    Reflects the general partner’s interest in the pro forma reduction to interest expense related to the repayment of debt upon completion of the July 2013 equity offering.

 

OWL Entities Combination Transaction Adjustments

 

(s)                                   Reflects an increase in the historical depreciation and amortization expense of the OWL Entities’ long-lived assets based on the estimated fair value of the assets acquired in the business combination. The pro forma average depreciation and amortization rate based on the estimated fair value and useful lives of the depreciable and amortizable long-lived assets is 10%. An increase in the current estimated fair value of the depreciable and amortizable long-lived assets of $1 million would result in an increase of approximately

 

11



 

NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements - Continued

 

$100,000 to pro forma depreciation and amortization expense for the year ended March 31, 2013. The estimated fair value of the depreciable property, plant and equipment and amortizable intangible assets acquired in the business combination is summarized below (in thousands):

 

Property, plant and equipment:

 

 

 

Water treatment facilities (30 years)

 

$

23,000

 

Vehicles (5 years)

 

9,000

 

Other (10 years)

 

2,000

 

Intangible assets:

 

 

 

Customer relationships (10 years)

 

60,000

 

Noncompete agreements (2.5 years)

 

2,000

 

 

(t)                                    Represents the additional interest expense resulting from advances of $167.7 million from our revolving credit facility to finance the OWL Entities combination at the interest rate in effect on LIBOR option borrowings of 3.2% at June 30, 2013. A change in the interest rate of 0.125% would result in a change of approximately $209,000 in pro forma interest expense for the year ended March 31, 2013.

 

(u)                                 Represents the general partner’s 0.1% share of the loss of the OWL Entities after the effect of pro forma adjustments.

 

(v)                                 Represents the elimination of the noncontrolling interest recorded by OWL LP, due to the fact that we acquired all of the ownership interests in the OWL Entities.

 

Statement of Operations for the Three Months Ended June 30, 2013

 

Equity Offering Transaction Adjustments

 

(w)                               Represents a pro forma reduction to interest expense related to the repayment of long-term debt upon completion of the equity offering at the interest rate in effect on LIBOR rate borrowings at June 30, 2013 of 3.2%. A change in the interest rate of 0.125% would result in a change of approximately $90,000 to pro forma interest expense.

 

(x)                                 Reflects the general partner’s interest in the pro forma reduction to interest expense related to the repayment of debt upon completion of the equity offering.

 

OWL Entities Combination Transaction Adjustments

 

(y)                                 Reflects an increase in the historical depreciation and amortization expense of the OWL Entities’ long-lived assets based on the estimated fair value of the assets acquired in the business combination. The pro forma average depreciation and amortization rate based on the estimated fair value and useful lives of the depreciable and amortizable long-lived assets is 10%. An increase in the current estimated fair value of the depreciable and amortizable long-lived assets of $1 million would result in an increase of approximately $25,000 to pro forma depreciation and amortization expense for the three months ended June 30, 2013. The estimated fair value of the depreciable property, plant and equipment and amortizable intangible assets acquired in the business combination is summarized below (in thousands):

 

Property, plant and equipment:

 

 

Water treatment facilities (30 years)

 

$

 23,000

Vehicles (5 years)

 

9,000

Other (10 years)

 

2,000

Intangible assets:

 

 

Customer relationships (10 years)

 

60,000

Noncompete agreements (2.5 years)

 

2,000

 

(z)                                  Represents the additional interest expense resulting from advances of $167.7 million from our revolving credit facility to finance the OWL Entities combination at the interest rate in effect on LIBOR option borrowings of 3.2% at June 30, 2013. A change in the interest rate of 0.125% would result in a change of approximately $52,000 in pro forma interest expense for the three months ended June 30, 2013.

 

(A)                               Represents the elimination of the noncontrolling interest recorded by OWL LP, due to the fact that we acquired all of the ownership interests in the OWL Entities.

 

Note 3 — Pro Forma Earnings per Unit from Continuing Operations

 

Our income for financial statement presentation and partners’ capital purposes is allocated to our general partner and limited partners in accordance with their respective ownership interests, and in accordance with our partnership agreement after giving effect to priority income allocations for incentive distributions, if any, to our general partner, the holders of the incentive distribution rights pursuant to our partnership agreement, which are declared and paid following the close of each quarter. These incentive distributions result in less income allocable to the common and subordinated unitholders.

 

For purposes of computing pro forma basic and diluted income per common and subordinated unit, we have assumed that no restrictions on distributions apply during the periods presented. Any earnings in excess of distributions are allocated to our general partner and limited partners based on their respective ownership interests.

 

                                                The pro forma earnings per unit have been computed based on earnings or losses allocated to the limited partners after deducting the total earnings allocated to the general partner. The pro forma weighted-average units outstanding in the table below represent the number of units outstanding immediately following the business combination with the OWL Entities, which includes units issued in the business combinations and the July 2013 equity offering described in the introduction to these unaudited condensed consolidated pro forma financial statements, and also includes 750,000 common units issued in a business combination in May 2012, 100,676 common units issued in a business combination in July 2012, 516,978 units issued in a business combination during October 2012, 175,211 units issued in a business combination in July 2013, and restricted units issued pursuant to incentive compensation programs that have vested. For the pro forma earnings per unit computation, we have assumed that all units outstanding immediately following the combination with the OWL Entities were outstanding during the entire year ended March 31, 2013 and the three months ended June 30, 2013. The pro forma basic and diluted earnings per unit are equal, as there were no dilutive units during the year ended March 31, 2013 or the three months ended June 30, 2013.

 

12



 

NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements - Continued

 

Earnings per unit are computed as follows (dollars in thousands, except unit and per unit information):

 

 

 

Year Ended

 

Three Months Ended 

 

 

 

March 31, 2013

 

June 30, 2013

 

 

 

 

 

Pro

 

 

 

Pro

 

 

 

Historical

 

Forma

 

 Historical 

 

Forma

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations attributable to parent equity

 

$

47,940

 

$

57,083

 

$

(17,633

)

$

(15,178

)

 

 

 

 

 

 

 

 

 

 

General partner share of income from continuing operations

 

(2,917

)

(2,925

)

(1,688

)

(1,690

)

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations allocated to limited partners —

 

$

45,023

 

$

54,158

 

$

(19,321

)

$

(16,868

)

Common unitholders

 

$

39,517

 

$

49,366

 

$

(16,609

)

$

(15,375

)

Subordinated unitholders

 

$

5,506

 

$

4,792

 

$

(2,712

)

$

(1,493

)

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per unit from continuing operations —

 

 

 

 

 

 

 

 

 

Common unitholders

 

$

0.96

 

$

0.81

 

$

(0.35

)

$

(0.25

)

Subordinated unitholders

 

$

0.93

 

$

0.81

 

$

(0.46

)

$

(0.25

)

 

 

 

 

 

 

 

 

 

 

Weighted average units outstanding —

 

 

 

 

 

 

 

 

 

Common

 

41,353,574

 

60,974,503

 

47,703,313

 

60,974,503

 

Subordinated

 

5,919,346

 

5,919,346

 

5,919,346

 

5,919,346

 

 

Note 4 — Long-Term Debt

 

Our historical and pro forma long-term debt as of June 30, 2013 is as follows (in thousands):

 

 

 

Historical

 

Pro Forma

 

Working capital facility

 

$

76,000

 

$

76,000

 

Expansion capital facility

 

444,500

 

324,357

 

Senior Notes

 

250,000

 

250,000

 

Other

 

20,036

 

20,036

 

 

 

$

790,536

 

$

670,393

 

 

 

 

 

 

 

Less - Current maturities

 

8,720

 

8,720

 

Long-term debt

 

$

781,816

 

$

661,673

 

 

Note 5 — Partners’ Equity

 

Outstanding general and limited partner units on a historical and pro forma basis at June 30, 2013 are as follows:

 

 

 

Historical

 

Pro Forma

 

General partner notional units

 

53,676

 

66,961

 

Limited partner -

 

 

 

 

 

Common units

 

47,703,313

 

60,974,503

 

Subordinated units

 

5,919,346

 

5,919,346

 

 

13



 

NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements - Continued

 

Note 6 — Interest Expense

 

Interest expense of OWL LP in the unaudited pro forma condensed consolidated statement of operations for the year ended March 31, 2013 includes $4.8 million of expense related to the retirement of a liability associated with a business combination. This non-recurring expense is not excluded from pro forma income as it does not result directly from our combination with OWL.

 

Note 7 — Other Events

 

On September 25, 2013 we sold 4,100,000 common units in a public offering. We used the net proceeds of approximately $127.6 million from this offering to reduce borrowings on our revolving credit facility. These unaudited condensed consolidated pro forma financial statements do not give pro forma effect to these transactions, since they occurred subsequent to our acquisition of the OWL Entities.

 

On October 16, 2013 we issued $450.0 million of senior notes. We used the net proceeds of approximately $439.4 million to reduce borrowings on our revolving credit facility. These unaudited condensed consolidated pro forma financial statements do not give pro forma effect to these transactions, since they occurred subsequent to our acquisition of the OWL Entities.

 

14